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The Energy Blog is where all topics relating to The Energy Revolution are presented. Increasingly, expensive oil, coal and global warming are causing an energy revolution by requiring fossil fuels to be supplemented by alternative energy sources and by requiring changes in lifestyle. Please contact me with your comments and questions. Further Information about me can be found HERE.

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December 01, 2008

EPA Raises Raises Requirements for Renewable Fuels

An item of interest to ethanol producers and other supporters of ethanol is this announcement by EPA, as further clarified by this announcement by EERE:

The U.S. Environmental Protection Agency (EPA) announced on November 17 that the 2009 renewable fuel standard (RFS) will require most refiners, importers, and non-oxygenate blenders of gasoline to displace 10.21% of their gasoline with renewable fuels such as ethanol. That requirement aims to ensure that at least 11.1 billion gallons of fuels will be sold in 2009. . . . While the RFS requirement is increasing by about 23%—from 9 billion gallons in 2008 to 11.1 billion gallons in 2009—the percentage requirement is increasing by nearly one third, from 7.76% in 2008 to 10.21% in 2009.

The larger relative increase in the percentage requirement reflects the fact that fuel consumption is expected to be lower in 2009, so a greater percentage of renewable fuel is needed to reach 11.1 billion gallons of renewable fuels. . . .

The 2009 RFS is also pushing up against what is known as the "blend wall." Most gasoline sold in the United States contains at most 10% ethanol (a blend known as E10), but the new RFS requires a slightly greater percentage of gasoline to be displaced with renewable fuel. . . . One way to sell greater amounts of ethanol is to sell E85, a blend of 85% ethanol and 15% gasoline, but despite rapid growth in the number of E85 pumps, there are still only about 1,800 E85 pumps in the United States. . . . To address the blend wall issue, DOE and others are studying the use of mid-range blends, such as E15 and E20, for use in standard gasoline-burning vehicles. Allowing all gasoline blends to contain up to 20% ethanol would double the potential market for ethanol.

The Energy Independence and Security Act of 2007 requires that the RFS to have annual increases until it reaches 36 billion gallons of ethanol in 2022, 15 billion gallons must come from corn ethanol and 22 billion gallons from second-generation biofuels. In 2015 corn ethanol is required to reach a peak of 15 billion gallons out of the total renewable fuel target of 20.5 billion gallons. The market share for corn ethanol remains at 15 billion gallons until 2022 when the target total for all renewable fuels reaches 36 billion gallons.

On a purely voluntary basis, gasoline blenders have always used more ethanol than the required minimum because increasingly high oil prices made ethanol an attractive fuel in its own right. Today, 12/1/08, with oil at $50.77/bbl (NYMEX) and RBOB gasoline at $1.095/gal (NYMEX) and ethanol at $1.596/gal at the Chicago Board of Trade (CBOT) it makes no economic sense to blend ethanol with gasoline.The RFS will become binding for the first time in 2009. Gasoline blenders will have to use 11.1 billion gallons of ethanol because that is what the law tells them, not because it makes economic sense

This was always going to happen at some time, given the much more ambitious RFS volume obligations in the 2007 law. It was never going to be possible to blend 20.5 billion gallons into the gasoline supply by 2015 without much wider uptake of E85 vehicles or other modifications of the U.S car fleet. But the unprecedented cyclical reduction in gasoline demand has brought the blending wall much closer.

While I am a supporter of ethanol as a means of reducing our dependence on foreign oil, I am not a supporter of the use of corn ethanol to the extent required by the RFS. Ten billion gallons per year (bgy) of corn ethanol is about the maximum that should be supported, let alone 11 or 15 bgy. Greater amounts seems to be an irresponsible way of utilizing U.S. farm resources at the present time. I would advocate reducing theses requirements to ten bgy and the total requirement from all sources of biofuels frozen at 11 bgy until cellulosic ethanol, biodiesel and biobutanol become more viable sources of fuel; greater amounts can always be produced if the market supports it. In fact it is time to take the emphasis off corn ethanol entirely and concentrate on cellulosic ethanol made from non-food feedstocks and biobutanol which can be used in up to 100% concentrations in current vehicles. After these technologies have been proven to be economically viable, say by 2015, then let market forces determine which flavor of fuel is most viable. Supporters of cellulosic ethanol claim that current corn ethanol production facilities can be easily converted to producing cellulosic ethanol, thus increasing the yield of fuel per acre.

The establishment of a market for ethanol and other renewable fuels is a worthy objective to prepare for future times when the cost of oil once again becomes more onerous and in short supply. The market for corn ethanol has been established and should be maintained. Subsidies for corn ethanol should be dropped as soon as possible, but this will not be possible as soon as I had anticipated, due decreasing prices for oil. I would favor that any subsidies be based on the difference between the cost of gasoline and the cost of ethanol. Because of corn ethanol, markets for biodiesel, biobutanol, cellulosic ethanol and any future biofuels should develop more easily and subsidies be required for only a short time, if at all.

Requiring all new vehicles be flex-fueled vehicles makes a lot of sense to me. This is the least costly way to enable widespread use of biofuels. Some $30 to $100 per car seems to be a reasonable price to pay to enable wider use of biofuels. Pontiac's new G6 is availablewith a flex-fuel 3.5L V6 at no additional cost over the gas version in the full range of body styles. Is this a sign of things to come? and by an American car company!

Vinod Khosla, the well known Silicon Valley, in his words, venture assistant, to technology based ventures, has a good, seemingly objective, White Paper, Food vs Fuel that should be of interest to readers of this post and thosee interested in the renewable fuels market in general. His view on corn ethanol is very similar to mine (which I developed independently, much before I heard of him), but expressed much more eloquently:

The future that Professors Runge, Senauer and Lester Brown and many other critics of corn ethanol see is similar to what we envision – cellulosic and biomass-based biofuels that offer better potential solutions, higher efficiencies, and a better environmental footprint. However, it is vital to note that none of this would have been viable without corn-ethanol in the first place – none of the university research, financial capital, or political backing for cellulosic would exist without the corn-based version proving its functionality and priming the market and infrastructure. Ethanol in its current manifestations has provided a valuable stepping stone away from the age of oil, and the transition to a cleaner and more environmentally friendly future based on cellulosic biofuels.

One of the things I find fascinating about energy issues is the list of unfounded reasons people come up with to be against something that works. The more impractical something is, the more they like it. So let the list begin:

-Food vs Fuel
-Subsidies
-Mandates
-EROI
-energy content.

Nobody is going hungry because American farmers are producing corn to supply 10% of the gasoline/ethanol mix. The only problem American farmers had with productivity is lack of market. American farmers are not longer having corn subsidized, now they are paying taxes.

The amount of energy in

Having a small mandated market only takes the fun out the market if you are OPEC or Russia and can not lower prices to drive ethanol out of the marker. Ethanol producers are paying property taxes and income taxes. New ethanol plant have good energy return and improving. The Mead Nebraska ethanol facility that we have discussed previously at the Energy Blog is a good example.

The amount of energy in a BTU of ethanol is the same a BTU of gasoline. Since we buy gasoline by volume mpg may be lower unless ethanol is efficient in the car you drive.

This an egregious example of our political system being unable to back off of a bad policy. Let me begin by stating the primary and secondary motivations for the corn ethanol program:

(1) The primary purpose is to artificially stimulate the demand for corn in order to drive up its price. As a number of politically well-placed individuals can benefit from high corn prices, this has carried the day.

(2) The secondary purpose is greenwashing for Detroit. Alternate fueled vehicles get a pass on the CAFE requirements, and the public can be fooled by the greenwashing PR as well. Ask yourself how well has this worked out for our automobile industry?

Kit may be right, that no US citizens have starved because of this program, however motivation number one (higher corn price) has been achieved. Corn prices are a huge issue in rural Mexico. But since the lives of brown non-english speaking people don't count, I'll rest my case.

Corn requires a great deal of fertilizer. Even with massive fertilizer inputs, farmers must rotate corn with other crops, due to soil exhaustion. High fertilizer prices, have been a huge worldwide issue of late. Many developing world farmers cannot afford to fertilize their fields. Food shortages, and starvation, as well as impoverishment of the agricultural sector is the result.

We are trying to maintain our unsustainable thirst for liquid fuels, by doubling up on our practice of unsustainable industrial farming. Long term this is going to have disastrous consequences. World resources of fertilizer are being used up at a comparable rate to fossil fuel resources. Unlike energy, food, and soil fertility are irreplaceable.

Whatever we do for bio-fuels (and I am convinced that they can play a small part in a sustainable future), we had better pay primary attention to the long tern sustainability of agriculture. If we fail in this endeavour, the future of humanity will include a die-off.

Nobody is going hungry because American farmers are producing corn to supply 10% of the gasoline/ethanol mix.

I know I should feed the troll Kit P, but it's important to emphasize that using 100% of today's US corn production for ethanol production would yield only a 7% reduction in US oil use. That's not a great help. Claiming that this will not cause people around the world to go hungry is typical for Kit P since he is a US redneck, hopefully a dying breed. Seriously Kit, you should get abroad more often. A bit of travelling would do you good. And also, learn basic maths to see that corn ethanol isn't worth a lot of trouble. And learn economics 101 - demand and supply. As BigTom mentioned, the corn subsidies have increased global corn spot prices. People who earn thirty cents a day will not be able to afford to pay forty cents extra for their food. So, yes, they are starving.

I am not opposed to corn ethanol, however. Just opposed to the government subsidizing options that are scientifically proven not to make much sense, such as corn ethanol and hydrogen fuel cell vehicles. If private investors want to invest in those options, let them. But the US has increased risk of bankruptcy and precious government money should not be spent on non-options.

That sounds like you have done a very good root cause analysis rick. Of course association is not causation. Cyril, bigTom, and rick are demonstrating my point about making up reasons to be against ethanol. Every world problem can now be blamed on US ethanol policy. Of course these world issues have been around for years and are very complex. It is also possible to find information.

Corn used for ethanol is feed corn and not grown for human consumption. When ethanol is produced, the energy is processed out and the animal feed remains. World demand for meat is increasing along with the cost of energy for agriculture. This has resulted in increasing commodity prices which are only a small part of the cost of food. Claims of increased world food prices are greatly exaggerated. Food prices have stopped their 60 year decline.

World hunger, racism, the environment, and government waste are all emotional issues. However, a systematic approach will allow one to properly evaluate an issue. Ethanol will be one of the great US success stories of US renewable energy.

My analysis covered an angle you failed to address and ponder. I understand the corn in question is feed corn. Yet I never said Mexicans were vegetarians and relied upon it for direct consumption. Ever been to a Mexican restaurant? They like their beef, chicken and pork just as much as Americans do, don't they?. The hardship of being able to afford feed for your farm animals qualifies as a direct result of inflated corn prices.

One more thing to add. Hunger is an emotional issue? Ever been hungry Kit? So hungry, yet you could not afford any food? It's easy to take the approach of, 'hey, it's not in my country.' Would you like a few pictures from the food banks I volunteer at? Ever have a five-year old girl come up and thank you for giving her food? Yeah, right here in America.

"Ever have a five-year old girl come up and thank you for giving her food? Yeah, right here in America."

Shut up idiot. People going hungry has nothing to do with the national or global food supply, and everything to do with corruption and plain old human evil.

Are five year old girls no longer supposed to be polite? I got food from the food bank for many years, and I always said Thank You! I ate cheese out of those little green cans. I had to eat raw oatmeal, dry. My father worked in a food bank for many years.

I would like to comment on the ethanol industry, specifically about ricks comment. Yes as of now corn is made from feed corn, but what do you think is going to happen if ethanol becomes a major source of energy. Corn farmers grow corn to make money, once the Oil companies have to switch to making ethanol, which most people think will be the most likely course of actions, they will either buy the farmers off just like they do now for oil, or they will pay the farmers more money than the government does, not to mention the other problems, such as additional deforestation. As far as hunger goes we have no one to blame but ourselves for that one. 87 percent of the corn grown now is not edible in its current form. it has to be processed or fed to livestock to become edible for us. The government, in 2002, spent 3.8 billion dollars for subsidies in the top three tiers of the pyramid (ever wonder why they changed it) and only 178 million dollars in the bottom. The fact of the matter is there is no clean options. All biomass energies will require further deforestation. Solar energy,hybrid cars, and windmills require mining which is connected to acid drain off as well as a lot of other plans. So if you want to save the environment, the only option is to get rid of man made energy. This would be possible if people stopped worrying about world economy and just started worrying about themselves. no government, no economy, just survival

Well, it would be better if we ate less meat. But some small amount of meat now and then is good for your health. So even poor people should eat some meat. They won't be able to afford it with this corn ethanol subsidy. So human health will diminish, morbidity increases.

This is not necessary. All that is required is: remove the corn ethanol subsidy. That's it. Stop throwing money at ineffective solutions, it hurts the long term energy future of everyone. Give more advanced biofuels a chance.

David, everything we do has impact. The question is: what options are the least malevolent, the cleanest, the least likely to cause resource and environmental problems at scale, the least likely to cause conflict and inequity around the world, etc.?

I don't understand the hostility. You say you were once the recipent of food bank services, yet you call me a moron for working in a food bank. If you were thankful then, you should be thankful people still volunteer their time to help others.

Let me repeat, American framers increasing corn production is not causing any hunger. The reason is that there is excess capacity to produce corn.

“I don't understand the hostility.”

That is an expected reaction of a normal American male to cheap manipulation my other man rather than engaging in a logical discussion. So Rick, if you can identify a case of hunger where the root cause is the American farmer let me know. I will have my friend get right on it.

American are among the most generous people in the world, especially American farmers. There will even help delver it with the help of some of the sailors and marines I know.

“The fact of the matter is there is no clean options. All biomass energies will require further deforestation.”

David I have identified many uses of biomass where LCA can document large net improvement of using biomass using the correct technology to produce energy. These solutions will increase forestation and improve the health of existing forests.

The real reason corn prices went sky high last year was because of exports. We produced a record corn crop in 2007 that exceeded our previous record by 10%. It is true that we used 25% of our corn crop to produce ethanol, but we only consumed 5% of the corn crop. This is because only 20% of the food value is consumed in the ethanol process. This remaining corn product was fed to cattle and chickens and much of it was exported. That means we still had a record amount of corn to feed the animals. This means it wasn't ethanol that caused the high corn prices; it was the exports. In 2008, we used even more corn for ethanol production and the price of corn has dropped by more than half because exports have dropped in half. Cheaper corn; reduced exports; where are the starving children?

There are various reasons why corn prices went up, but artificially boosted demand via subsidies was one of them. Speculation is another. Droughts around the world yet another, etc.

Apparently, a lot of people can't understand that an increase in price can and often does have multiple combined reasons. But you don't need a Ph.D. to understand demand and supply vectors. It's high school and college stuff. So it's kind of shameful that so many people can't grasp this.

Anything and everything seems to be getting in the way of meaningfully discussing in an adequately reality-oriented manner the predicament that appears before humanity. This primarily and distinctly human-driven predicament is already visible, even now, on the far horizon.

If you please, your assistance is requested.

Seven days ago the "AWAREness Campaign on the Human Population" submitted an idea for how we think the Obama Administration could change America. It's called "Ideas for Change in America."

I've submitted an idea and wanted to see if you could vote for AND COMMENT on it. The title is: "Accepting human limits and Earth's limitations". You can read, vote for and comment on the idea by clicking on the following link:

Fourteen votes are been received so far. That is about 2 votes per day. If you agree, then vote. If you disagree, please comment. Of course, should you wish to vote AND COMMENT, please feel free to do so.

The top 10 ideas are going to be presented to the Obama Administration on Inauguration Day and will be supported by a national lobbying campaign run by Change.org, MySpace, and more than a dozen leading nonprofits after the Inauguration.

There’s a great video on San Francisco I Am where hundreds of teens in the Bay Area ditched their video games at home and headed for the biggest green festival in the nation. The Festival was held in San Francisco and the kids learned AND taught one another about climate change and green jobs. Even Chuck D from Public Enemy was there.

Reading the confused ramblings of the anti-ethanol types is so entertaining, it almost sounds like half of you are oil execs masquerading as environmentalists. That being the case maybe you could explain to the other half ethanol's now substantial role in supplying lead-replacing octane to Americ's gasoline pool

The consumption rate of carbon-based fuel is so high that there should be alternative for this since the stock and its impact on environments contribute to global warming. I am a supporter of biofuel whether it was ethanol or palm oil as a means of reducing our dependence on carbon-based oil.

Let me repeat, American framers increasing corn production is not causing any hunger. The reason is that there is excess capacity to produce corn.

There is no excess capacity when corn ethanol must provide a substantial amount of oil substitution.

Indeed, using all of today's US corn production would barely get a 7% reduction in petroleum usage. That is by energy content; higher engine efficiency of ethanol might increase this slightly. Then again the large fossil fuel input of corn ethanol will make the fossil fuel substitition much lower.

Let's say there's a factor of 2 overcapacity for corn production. This is rather optimistic, and it increases risks for soil fertility and biodiversity; the sheer land requirement alone would make for huge impacts, even if the farming methods is relatively benign. And then that's still only 14 percent of today's oil demand. Problem 86 percent unsolved, and we get a lot of new problems in the deal.

One could see that using all this feed corn for biofuel production will cause meat producers/cattle farmers etc to look elsewhere for their feed. This 'elsewhere' means different food crops, and this will result substantial competition of fuel with food. Since rich people can afford to pay more for food, they will price out the poor who eat non-food agriproducts. In fact this is what is already happening right now.

You can't escape food vs fuel with large scale corn ethanol.

Corn ethanol is a loser and subsidies that go to it are locking us into a loser pathway. Stop the subsidies. Give incentives to advanced biofuels based on scientific merit. This is much to ask from the redneck agrifuel lobby, but it will benefit them on the long run, as they can make a hell of a lot more money per acre (higher yields) and maintain soil fertility for future generations. If the argument is brought like this, we might win the agrifuel lobby over.

Opps, Cyril is out of date. Ethanol has already replaced 8% of gasoline. Not only that American farmers have produced a surplus of corn. Part of the reason is the the food value is not lost when some of the energy is processed out.

If Cyril has bother to read the above article he would know,

“The Energy Independence and Security Act of 2007 requires that the RFS to have annual increases until it reaches 36 billion gallons of ethanol in 2022, 15 billion gallons must come from corn ethanol and 22 billion gallons from second-generation biofuels. ..”

I suppose that is what intended by “Give incentives to advanced biofuels based on scientific merit.”

Opps, Cyril is out of date. Ethanol has already replaced 8% of gasoline.

No, I am talking about all oil use, not just gasoline. Polish up your reading skills Kit.

If Cyril has bother to read the above article he would know,

“The Energy Independence and Security Act of 2007 requires that the RFS to have annual increases until it reaches 36 billion gallons of ethanol in 2022, 15 billion gallons must come from corn ethanol and 22 billion gallons from second-generation biofuels. ..”

I suppose that is what intended by “Give incentives to advanced biofuels based on scientific merit.”

22 billion gallons from second generation = a good thing to try. 15 billion gallons from corn ethanol = not a very good target to aim for. Corn ethanol is an extremely marginal technology. Costs a lot gives us little.

There are better ways to provide support to farmers. Stimulate them to be more innovative, like co-producing food with biofuels, and stimulating advanced high yielding crops with little fertilizer and water use etc.

J Nooone, we are on the right path, yet we can do better if we cut out the 15 billion gallons from corn ethanol, and give the subsidies to better biofuel production technologies and - feedstocks (like sustainable forestry and agriwaste biofuel production with low water and nutrient input).

Its good to increase alternative fuels, however you there is a fine line that the EPA has to walk. There needs to be market demand for the fuel. Just increasing the supply without viable buyers can and has been an issue. Also Certain fuels should not be mandated i.e. “Corn ethanol” which was a horrible decision , drove up food prices. Government usually doesn’t create the best circumstances when it mandates something without looking at all the potential repercussions. However in this case I think it should spur innovation and production, Hopefully.

The claim that corn ethanol has driven up food prices has been debunked a long time ago. In fact it is hard to find much wrong with corn ethanol at all. The mandate certainly did spur production and innovation.

The fact that the US was able to reach a state of over production so quickly without negative ramifications (unless you invested poorly) answer many questions about the limitation of biomass.